After today's mega-merger, HDFC Bank is going to possess 18 lakh crores in assets.

On
Saturday, HDFC, a key player in the housing finance industry, and HDFC Bank, a
wholly-owned subsidiary, will merge after receiving approval from their
respective boards on Friday.

After
the reverse merger is finalised on June 30, the 44-year-old HDFC Ltd. will be
dissolved. The first home finance firm in the country, HDFC Ltd, will change
its name this coming Saturday.

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HDFC
Bank stated in a regulatory filing that the “Effective Date” of the
composite scheme of amalgamation would be Saturday, July 1, 2023, the date on
which HDFC Investments, HDFC Holdings, HDFC Limited, and HDFC Bank would file
the certified order of the NCLT authorising the Scheme with the RoC.

The
HDFC Bank board of directors, after consultation with the HDFC Limited board of
directors, has decided that the shares of HDFC Bank would be issued and awarded
to HDFC Ltd shareholders on July 13, 2023.

The
transfer of HDFC Ltd’s commercial papers into the name of HDFC Bank will take
place on July 7, 2023, while the transfer of non-convertible debentures will
take place on July 12, 2023.

On
April 4, 2022, HDFC Bank agreed to acquire its parent company, the largest
pure-play mortgage lender, in an all-stock transaction valued at $40 billion,
creating a financial services colossus with combined assets of over 18 lakh
crore.

At
the end of March 2023, the combined firm’s overall business was worth 41 lakh
crore. The combined company would have a net worth of more than 4.14 lakh crore
after the merger.

At
the end of March 2023, the companies’ aggregate earnings were over 60,000 crore.When
the HDFC siblings’ combined stock is factored into the indices, its weight will
be close to 14%, well above that of the current index heavyweight Reliance
Industries (10.4%).

Based
on data provided by Bloomberg, the combined entity created by the merger of
HDFC Bank and HDFC is the fourth largest bank in the world by stock market
capitalization, trailing only JPMorgan Chase & Co, Industrial and
Commercial Bank of China Ltd (ICBC), and Bank of America Corp. Its current
market cap is over $172 billion.

Once
the transaction is finalised, existing HDFC stockholders would own 41% of HDFC
Bank, bringing the total number of public shareholders to 100%. For every 25
shares of HDFC stock a shareholder has, they will receive 42 shares of HDFC
Bank.

The
combined company has greater scale, a more complete product offering, stronger
financial footing, and the ability to drive synergies across revenue
opportunities, operational efficiencies, and underwriting efficiencies, which
will benefit a wide range of stakeholders, including customers, employees, and
shareholders.

After
the merger was finalised, HDFC Bank CEO and Managing Director Sashi Jagdishan
claimed the combined power will allow for the development of a “holistic
ecosystem of financial services.”

We
are thrilled to have HDFC Ltd’s skilled staff join HDFC Bank. I believe that
flexibility, versatility, and a commitment to quality will characterize our
journey. While forging ahead, “we will view obstacles as learning
opportunities, draw wisdom from past mistakes, and aim to set the standard for
excellence and honesty in the financial services industry,” he said.

The
bank also noted that this event marked HDFC Bank’s evolution into a financial
services conglomerate that provides a full range of financial services via its
subsidiaries, including banking, insurance, and mutual funds.

The
bank has served as a distributor for these items up until this point.

Combining
the attributes of a well-known home loan brand with those of a financially
stable institution has resulted in India’s largest private sector bank, HDFC
Ltd, merging with HDFC.

The
report also noted that with a higher net worth, larger ticket loans, such as
those for infrastructure, could be underwritten, which would aid in nation-building and lead to additional job creation.

After
the merger goes into effect, HDFC Ltd’s staff members will transfer to HDFC
Bank.

The
bank has spent the previous few months laying the groundwork for a seamless
transition of HDFC Ltd. personnel to HDFC Bank, including the integration of
all systems and processes.

Following
the merger, HDFC Securities Ltd, HDB Financial Services Ltd, HDFC Asset
Management Co., Ltd., HDFC ERGO General Insurance Co., Ltd., HDFC Capital
Advisors Ltd., and HDFC Life Insurance Co., Ltd. have emerged as some of the
most important HDFC Bank subsidiaries.

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